Afternoon roundup

The worthies from the tabs:

• Kate MacNamara tracks down all the Covid funds that wound up diverted into the road use subsidy. $1.3b and counting. 


• A reminder that it can be easiest to innovate by leaving academia. 


• Messy claims that the UK sugar tax reduced obesity. Looks like green jellybeans. 


• People keep telling me cancel culture isn't real. And yet I keep seeing stories like this.


• Great to see that the sponsored refugee regime has been working out. Genuine good news. Let's hope it expands. 


• Treasury's hiring a Director, Economic Systems, meant to have a significant leadership role in macro and growth. Nothing in the job requires an economics degree. I hope that properly qualified economists do apply, and that good applications drive out bad. 


• Men on Tinder are not intimidated by highly educated women. 


• Markups and inflation. How markups move can tell you whether you're dealing with a supply-side or demand-side issue. Price Theory is great. 


• Bill English's 2005 Chapman Lecture. Some issues are timeless. 
• Helen Dale on the Return of the Pagans.


• Tap Yellowstone for basically limitless power. But it would cost on the order of $3.5 trillion to build. Not huge when compared to overall annual energy spend in the US, depending on marginal cost of running the thing and whether it could generate low-cost hydrogen for vehicle fleets. But it is a very big number.


• I would love to know how much Council time and effort went into this mess. A developer wanted to turn a ruin of a former dairy into housing. Council didn't want her to. They eventually relented and let her build, on condition that the houses have wooden window frames. What incredible value Council added here. Kudos. They should all be very proud. Especially the resource consent team leader who argued that the developer should have first tried putting up a fish and chip shop or a laundromat. 

A clarification on sugar taxes

A few weeks ago, Rachel Thomas at Stuff included a short bit from me on sugar taxes and a new WHO metastudy. 

The Spinoff provided a perhaps too short a summary of that in its daily newsletter. I'd sent them a brief note of clarification, figuring that it was too late to change anything since it's an emailed newsletter. But it's online, here. 

The question of a sugar tax cropped up again earlier this month. Rob Beaglehole from the NZ Dental Association argues we need to be proactive with a sugar reduction strategy because of the woeful state of water fluoridation in New Zealand. The New Zealand Initiative’s Eric Crampton says the evidence doesn’t support the argument that a tax would reduce consumption.

I'd sent a note through to them, in case the issue came up again. I'll copy it here, mildly edited:

Thanks for the mention in today’s bulletin.

No need to do anything about it, but more for any future ones.

The problem with a ton of sugar-tax studies is that they assume that any drop in spending on soda (often the only data they have – they know spend shares, but they don’t know consumption) means a drop in consumption. Some of the drop could be a drop in consumption, but some of it could be a shift to downmarket product or product that’s lower cost-per-unit.

Again – this problem comes in when researchers are using household spend data that surveys people about how much they spent on various things over the past period, then combines that spend data with some measure of average prices to try to estimate consumption. 

If you see that someone shifted from spending $20/week on soda before a tax to spending, say, $18 in total after a tax, is it because:

a) They had been spending $1/can before the tax and bought 20 of them per week, and reduced that to 9 cans at $2/can after the tax – huge decrease in consumption!

b) They had been spending $1/can before the tax and bought 20 of them, and shifted to buying four 2-litre bottles of home-brand soda at $4.50 after the tax – small increase in consumption!

c) Some unknown combination of the two?

The studies that have only spending data effectively assume that (a) is the only thing that’s happening. (c) is the most likely thing, but the studies can’t see it. 

So it isn’t that a tax doesn’t decrease consumption. It is likely to decrease consumption somewhat. It’s more that the campaigners assume gigantic effects on consumption, because when many people are doing (c) and some are only doing (b), the studies assume it’s all (a).

It’s a technical issue in how the estimates are undertaken. They don’t handle things well when there’s adjustment not just in quantity but also in price-point. John Gibson over at Waikato has demonstrated the problems with it. But so much of the literature just ignores the problem. And the WHO meta-study is just a complicated average across studies that did not exclude studies known to have this problem. An average that includes overestimates is going to be an overestimate.

Sugar taxes, yet again.

Yesterday, just after 3, Stuff's Senior Health Reporter Rachel Thomas gave me a call. A new WHO-funded meta-study on sugar taxes was out, and she wanted comment before 4.

I received the study at 3.10 and started in. 

At 3.52, I sent this through:

Cool. This is the background version. Will send quotable version shortly. 

A serious crack at this one would require checking the studies they included against the studies that John Gibson and Bonggeum Kim evaluated in a 2019 piece in the Journal of  Development Economics.

Also attached in case you don’t have access. 

Gibson and Kim found that 80% of the studies they surveyed suffered from a severe methodological error because they’re based on household expenditure share data, not consumption data.

What does that mean?

Most of the time, researchers don’t have a clue how much of anything you actually purchased. They have survey data on household expenditure shares. “How much did you spend on {long list of things} in the past week?”. They then divide total spending in a category, like soda, by the average price of thing, to get a ballpark on quantity. 

And that all sounds great until you remember that there are two margins along which people can respond to a soda tax. Say I spend $50/month on Coke that costs $1/can before a soda tax comes in. The tax is $0.25 per can. If you observe that, in the spending data, I now spend $40 per month, what should you conclude? Have I reduced my consumption to 32 cans per month in response to the price increase? Maybe! But I might have shifted over to the store brand soda that cost $0.50 per can before the tax, and costs $0.75 per can after the tax. If I did, I might be consuming 53 cans per month ($40/$0.75), not 32. 

You can’t tell if all you have is household spend-share data rather than actual unit numbers. And 80% of the studies that Gibson and Kim looked at didn’t deal with the very important problem of making inferences from data when people can be adjusting not only on a quantity margin, but also on a quality margin. I might not even have shifted from Coke to home-brand. I might have shifted from cans to 2 litre bottles that cost far less per drink. But the researcher won’t have that data and has to make inferences. 

Anyway, will send through a quotable version. But that’s the underlying problem with a ton of these studies. And they don’t mention it in their selection criteria for inclusion. They just rely on an external letter grade on quality that it’s really unclear considered the problem either, or to what extent. 

I followed it up shortly thereafter with potentially more useful quotes:

“Metastudies always have difficulty in weighing the quality of the different underlying studies. A metastudy takes a complicated average of effects across studies. If the bulk of the underlying studies have substantial errors in method, then the average effect across those studies will suffer the same flaw.

Many studies looking at the effects of prices on consumption, including studies looking at sugar taxes, use survey data on household spending on different kinds of goods. The surveys do not have information on quantity, just spending. Some researchers then estimate the effect of the tax by dividing the amount a household spends on soda by the average price of soda, before and after the tax. But that method can err severely if, in response to a soda tax or a sugar tax, households shift from higher-cost name-brand drinks like Coke to lower-cost store brands, or from higher-cost cans to lower-cost 2-litre bottles. If a household shifts from spending $100 per month on Coke costing $1 per can before a soda tax, to spending $90 per month on HomeBrand costing $0.75 per can including the new sugar tax, a lot of studies would falsely conclude that their consumption had declined.

When Waikato economist Professor John Gibson surveyed the literature in the Journal of Economic Development in 2019, he found that over 80% of published studies using this kind of data include this kind of error. It is important that a rigorous metastudy account for this kind of problem. That this metastudy does not seem to mention the problem in its discussion of which studies were included in its evaluation, and which were excluded, seems a substantial problem likely to lead to overestimation of the effects of sugar taxes on consumption. But it would take further work looking directly at the studies evaluated to tell how big a problem it will be for this metastudy.”

Then I dug a bit more on the references. Can't do anything comprehensive on a short turnaround. Can I see studies cited in the metastudy that I just remember the names from? If I remember the name, it's either because the thing was actually a decent one, or because it was not. 

First one I check: Colchero et al 2015. Why was the name familiar? John Gibson had pointed to it as having had this specific problem. So I sent this through:

Colchero et al 2015, cited in the meta study as one of the ones they’re using to infer elasticities, has the problem – Gibson cites it specifically as having this problem (using budget share data and the standard unit value method that doesn’t deal well with adjustments on the quality margin) 

I can’t check all of them in the time available. But I can see immediately that it’s a problem in the first one I looked at – but I checked that one because I remembered the name being familiar. 

I had suspected that the metastudy's exclusion criteria did not exclude studies that used expenditure share data without accounting for adjustments on the quality margin. Finding one that had not meant it had not. 

So it would be hard to have any confidence in the rest of the metastudy. 

I didn't expect it would all make it into the piece of course. 

The print version of the morning newspaper was a bit galling. None of it was there! 

Just comment from the usual sugar-tax suspects on how the new study is awesome, proof that the government has to put in a sugar tax - the usual kind of thing. 

Quotes that could have been given without even looking at the study. 

The online version found a bit of room for my warnings about the data issue.

Economist Dr Eric Crampton – who has long been against sugar taxes - said a drop in spending didn’t necessarily mean a drop in sales.

He said at least one study included in the meta-analysis based a drop in sales on household spending data alone.

”If a household shifts from spending $100 per month on Coke costing $1 per can before a soda tax, to spending $90 per month on HomeBrand costing $0.75 per can including the new sugar tax, a lot of studies would falsely conclude that their consumption had declined.”

The study was published in the scientific journal JAMA on Thursday.

Life would be so much easier if I were on the other side on this one, or just stopped caring about the data. 

I could give quotes that would make the print version, and I wouldn't even have to have read or understood the study. Just be on the correct side of the issue. 

No need to blitz through a metastudy in half an hour after refreshing my memory on the specifics of the Deaton-method spend-share issue in these studies, check whether the study's exclusion restrictions seem to handle it, find that that just punts to a Cochrane assessment that I won't have time to evaluate, run back to the bibliography to check what studies they did use because if they included even one known-bad one, their exclusion restriction can't have been right, find one, and write it up. 

I'd have just been able to say something lame like "Anyone who cares about children would want a sugar tax now. Everyone who opposes it must be Big Industry. Here is a picture of some rotten teeth. Just look at it!"

So much easier. And probably even without the "you can ignore this guy because he just doesn't like sugar taxes" tag up front. 

Ah well. These boulders don't push themselves up the hills. Somebody's gotta do it. 

Update: The metastudy is here. Knock yourselves out. Nobody cares whether the thing is right or wrong, just whether it advances the cause of getting a sugar tax. 

Afternoon roundup

The worthies on a much-belated closing of the browser tabs:

• Zero waste protesters have been sending their rubbish to MPs using Parliament's Freepost service. Could the rest of us do the same if central government waste disposal levies make using landfill a bit more expensive than it really ought to be?
• Nice piece in The Atlantic on Article 25 of the Constitution, which allows for the removal of a President medically unfit for office. Trump's speech in which he talked about building a wall in Colorado hasn't seemed sufficient evidence of his madness for anyone to do anything about it as yet though. 
• Manhole always sounded a bit iffy anyway. 
• More evidence that flavoured e-cigarettes don't encourage youth uptake and that there's no youth nicotine epidemic in America. I hate that moral panics drive policy. Meanwhile, more evidence that US messes have everything to do with contaminated illicit THC vapes. 
• Eli Dourado's tracking the betting markets on Brexit. Your go-to for the price of Brexit. 
• Cawley, Frisvold and Jones find that SSB taxes don't do much, resulting in consumption reductions on the order of five calories per day. 
• Occupational licensing results in welfare losses: increased wages for licensed workers are offset by reduced employment, and consumers bear some incidence. Again, wouldn't it be nice if the Commerce Commission could look at the anticompetitive effects of these licensing regimes here? 
• Immigration is making Canada great. 
• Nick Whitaker interviews Tyler Cowen
• Remember how I keep saying there are huge currently uninsurable risks around earthquakes? Eight years. 
• Superb piece from Joe Bennett on climbing Everest and bucket lists.
• A plea for the America That Was

Skegg

A rather one-sided piece over at the ODT points me to a new short book from the Otago Public Health shop. 

Let's take these in turn.

The ODT piece has Bruce Munro gush over Otago public health's David Skegg and Skegg's latest book, published by Bridget Williams (of course). The basic thrust of the piece is that noble public health academics have been trying for policies that they know will reduce all the harms from alcohol, and smoking, and sugar, and that only the nefarious actions of shadowy interests group stand in the way. Munro hits all the usual tropes - the purported $7.8b social costs of alcohol, the power of the liquor companies, Katherine Rich, Dirty Politics, and me.

Yet, despite health researchers calling for a tax on sugary drinks to slow the epidemic, New Zealand governments, left and right, have been reluctant to go there.

"In Britain, even the Tory Government has introduced a sugar tax. But, again, our Minister of Health has repeatedly said there are no plans to do that in New Zealand," Sir David says with exasperation.

Lobbying against a sugar tax has been the Food and Grocery Council, and the New Zealand Initiative.

The New Zealand Initiative is a think tank that boasts of its reach and influence.

"It was a year in which the Initiative once again left its mark on New Zealand's political debates and public policy," the Initiative's latest annual report states.

Its chief economist, Dr Eric Crampton, is a former academic known for his attacks on public health initiatives, Sir David says.

According to the Initiative website, Dr Crampton wrote or spoke about a sugar tax half a dozen times during 2018.

But, says Sir David, "when Dr Crampton writes an opinion piece arguing that sugar taxes would be `offensive' and ineffective, he does not mention that his organisation is partly funded by Coca-Cola Amatil and the supermarket chains".

I wish that I could take the credit here for killing a bad policy, but I really can't. The main work actually has come from, well, those I cite as the very next paragraphs down in the piece Skegg's mentioning.

Here's the bit he didn't mention:

But don't just take my word for it.

The Ministry of Health commissioned the NZIER (New Zealand Institute of Economic Research) to review the literature on sugar taxes around the world.

NZIER found little effect of sugar taxes on consumption, and no evidence of health benefits.

And documents released to the New Zealand Initiative by the Ministry of Health showed that the ministry had reached a very similar conclusion about sugar taxes, advising the minister that there is "insufficient evidence that a sugar tax would be effective in reducing obesity".

The ministry also warned that the quality of evidence presented in favour of sugar taxes "is a major concern".

All of that means that, even if sugar taxes were easy to implement (and they are far from easy to implement), there would still be no good reason to do it.

It is time that public health activists simply admitted that they got this one wrong and left us alone.

See, it isn't just shadowy interests that don't like sugar taxes. It's also the OIAed documents from MoH and the NZIER's report commissioned by MoH. And both of those supported by Marsden-funded work by Waikato University's Professor John Gibson showing that estimates of the effects of sugar taxes on consumption are grossly overstated.

The piece ran in the ODT's weekend magazine. I sent my reply to the ODT just after lunch on Monday. They finally ran my reply today - one week after receiving it. I expect I'd have been making a Press Council complaint if they hadn't.

Unfortunately, the ODT stripped out all of the links to the underlying work in their online version. And they, of course, will not put a link to my rebuttal at the bottom of Munro's piece. Because Otago will Otago.

Here's the full text, with the links.

The dangers of superhero thinking
Superhero movies have had something of a comeback over the past decade, seeming to be one of the surest ways of generating a decent box-office take. But tropes of noble heroes and venal villains are not the best way of understanding the world. And they do us a specific disservice when they cross over into newspaper reporting.

This weekend, Bruce Munro wrote a fantastic story of sugar tax heroes and villains in the Otago Daily Times’ magazine. The heroes are the crusading public health research activists, who have only noble intentions and know that sugar taxes will do all manner of good. The shadowy villains on the other side – paid lobbyists – thwart the crusaders’ vision of a healthier country.

If only things were that simple.

My opposition to sugar taxes had me cast among the villains in Munro’s article. Otago University’s David Skegg noted that I have been rather vocal about sugar taxes recently, and implied that my opposition has pecuniary motivation: I am Chief Economist with The New Zealand Initiative, a think tank whose member-funders consist of many of the country’s top companies, including Coca-Cola and the supermarkets. Our members are listed on our website and are hardly secret.

But neither Munro nor Skegg bother to mention any of the substantial concerns raised across the columns and interviews they cite as damning me. If they had bothered to read those columns, they might have noticed that the tallying of heroes and villains is more complicated than they like to pretend.

In January 2018, the Ministry of Health released to me, after an Official Information Act request, a report it had commissioned from the New Zealand Institute for Economic Research (NZIER). The Ministry had asked NZIER to review the past five years of published literature on sugar taxes and to gauge their effectiveness. Having received the report in August 2017, the Ministry then sat on it – an election was underway, and the Ministry needed a Minister to receive the report before releasing it publicly.

The NZIER report – which was, again, funded and commissioned by the Ministry of Health – reached the same conclusion as previous work by the Initiative. NZIER concluded that methodologically rigorous studies on sugar taxes “report reductions in intake that are likely too small to generate health benefits”, and that any benefit of those reductions could easily be swamped by consumers shifting to other sources of sugar or calories.

NZIER also weighed heavily research underway at Waikato University by Professor John Gibson, my former Canterbury University colleague. His work on sugar taxes, supported by the Royal Society’s Marsden Fund, shows that many estimates of consumer responsiveness to sugar taxes are simply incorrect. Gibson gave a superb presentation on this work when he was awarded a well-deserved Distinguished Fellowship with the New Zealand Association of Economists in 2017.

Further Ministry of Health documents provided under the OIA included a presentation by the Ministry of Health titled “Sugar Tax: Why we still don’t have one”. There, the Ministry noted: “There is no evidence that sugar taxes reduce obesity or obesity-related illness.” While the presentation did not note any industry pressure influencing the Ministry’s position, it did point to “[p]ressure in NZ from health academics” and the media.

Overall, the NZIER report and the set of papers released under OIA showed a different picture to Munro’s tallying of heroes and villains. Where Skegg suggests only shadowy interest groups oppose Otago public health’s crusade for sugar taxes, we find instead a Ministry of Health sceptical of the merits of sugar taxes, and a Ministry-commissioned report that lends substantial weight to that scepticism.

I have summarised the NZIER report and the Ministry documents in columns and interviews over the past year. When the Ministry of Health’s then-Chief Science Advisor, Dr John Potter, provided the Prime Minister with two pages of bullet points in support of sugar taxes, and forgot to mention that the Ministry had only two weeks earlier released the NZIER report reaching the opposite conclusion, I noted that as well. It seemed a rather underhand attempt to mislead the Prime Minister.

Universities are meant to be places where ideas can be contested in the pursuit of truth. When public health academics convince themselves that only the shadowy workings of lobbyists can explain why their ideas have not been implemented, and ignore any piece of evidence that does not fit their worldview, it becomes difficult for them to pursue truth.

Superhero tropes where valiant public health crusaders battle evil vested interests may sell movie tickets and newspapers. But they do not help us to understand, let alone fix, real world problems.

Dr Eric Crampton is Chief Economist with the New Zealand Initiative. The Initiative is funded by the subscriptions of its members, who are listed on the Initiative’s website. The breadth of its membership protects its independence.

Okay. And now over to the BWB book.

Here's Skegg:

So it looks like the Munro piece is mostly just pulling from the BWB book. He's citing the same piece over at the Dom that he mentions in the Munro piece, and again ignores the very next paragraph citing NZIER's work and the Ministry of Health, keeping his heroes and villains framing. 

Otago is an embarrassment. And Bridget Williams Books needs to improve its refereeing. I refereed Julie Fry and Peter Wilson's book on immigration for them, and went through things in rather some depth. I guess that they handed this one to an Otago Person for refereeing instead, but who knows. 

Afternoon roundup, and around the traps

The worthies on the closing of the browser tabs.

• Nice comparison of vacant housing to transitional unemployment, in an American context. Filing this one away here for the next time somebody notices a few empty houses and decides that policy should do something about it. It comes up too often. 
• Susan Edmunds over at Stuff looks at household income distributions; the piece includes a short bit from me on AHC- and BHC- incomes. 
• Universities need to lift their darned game. 
• AUT not only caved at the last minute to pressure from the Chinese Embassy to pull the rooms booked for a memorial event for the Tienanmen Massacre, they also (and I just cannot stress enough how stupid this is) failed to redact the name of the lecturer who had booked the rooms when the documents were released under OIA. I hope that lecturer does not have family living under the Communist dictatorship. Utter muppetry. Newsroom's since blanked out the name but what the hell. 
• International students at Auckland University from China cannot be expected to feel safe there unless the University takes a stronger stand in support of their international students - and especially when the Chinese embassy is lauding the pro-Communist student who shoved the student who was supporting the protesters in Hong Kong. 
• I dunno what the answer is here. Stronger emphasis on freedom of speech in international student orientation events and policies expelling students who become violent in debate with other students could be part of it. But universities are massively dependent on foreign students, disproportionately from China. Capped domestic tuition fees have the universities seek money where they can - from full-fees paying foreign students. The government has to cap tuition fee increases because students don't really pay them - the government does. The first year's free, the rest is funded by loans that are marked down by about 45% the second they're issued. Every tuition fee increase increases the government's liability through the student loan portfolio. So you get this self-reinforcing mess that the government cannot afford to cover the education costs for the volume of students it wants to go through the universities and is unwilling to have students pay their own way a bit more, so pushes the universities to get international students to cover the bill. That builds in vulnerabilities when stuff like this happens. 
• If you wanted to build a house out of straw bales and eco-friendly materials, good luck getting it signed off and consented. "Oh, the market fails to provide eco-friendly alternatives!" Yeah, well, if the government won't sign off on the standards, then you get messes. 
• Elsevier is expensive; the UC libraries no longer subscribe to them. So the excellent Ted Bergstrom is organising volunteers to put together running tables of contents of those journals with links through to faculty website copies of the final edited versions of their own papers. Superb.
• I don't get why the Reserve Bank wants to ban anyone who knows monetary and macroeconomics from serving on the monetary policy committee, but that looks to be what they're doing. It's hard to come up with good explanations. The piece at Interest has some minor comment from me.
• Running field experiments? Watch out for this: the presence of the foreigner as experimenter changes behaviour.
• Google might yet build itself a city development in Toronto. It looks pretty neat. 
• I also give a couple warnings about a 'virtual shopping' study finding that people in a fake supermarket are responsive to sugar taxes. In the real world, people stock up when things are on special, and buy less when it isn't, so short-term price responsiveness isn't the same thing as long term consumption changes. 
• A mammoth listening task: Jordan Hoffman ranks 180 Rush songs. The ranking is very defensible, though I'd have moved Dreamline and Time Stand Still up the list a bit and pushed Working Man down the list. Almost all of the songs are on Spotify; here's a playlist, from lowest to highest ranked. And Hoffman is absolutely correct in his top pick (again: 1 here is the lowest-ranked. You work your way up). UPDATE: It looks like the embedded playlist can only run the lowest-ranked 100; click through to the web player to get the full list.
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A sugar intervention that actually looks promising

Usually I'm pointing to daft stuff on the sugar file. 

But my jaw dropped when I read this one. An intervention that sounded sensible, that's been piloted, that looks effective, and is quite possibly cost-effective too.

Here's RNZ:

But dental decay in even the most deprived communities could be prevented by the simple method of brushing teeth once a day at school, and a Northland study had proved it, and the government should take heed, Dr Stallworthy said.

In 2015, DHB dentist Ellen Clark set up a highly controlled tooth-brushing trial in Northland schools for her Master's thesis in Public Health, through the University of Otago.

A teacher aide was paid to supervise tooth-brushing sessions, once a day for 170 children at Kaitaia Intermediate School.

Several other schools were selected as controls, all of them in areas of high deprivation, where children were given a toothbrush and fluoride toothpaste, but had no supervised brushing sessions at school.

More than two-thirds of the children were Māori.

Ms Clark said she had hoped to improve the children's oral health - but the results were far better than she dared to hope.

"The children who were brushing (at school) had a mean number of 11.7 tooth surfaces that improved - that is, they remineralised or (the decay) reversed. In comparison, the kids who were not brushing had 8.6 tooth surfaces that deteriorated over the year which was quite profound, I wasn't expecting that - I thought you'd have to follow these kids over several years before you saw such significant results."

Tooth-brushing programmes in schools in Denmark and the UK had been showing similar results, Ms Clark said.

One of the better known ones, the Scottish Child Smile project had saved the government an estimated $NZ9.1 million in just two years.

The low-tech intervention could do the same for New Zealand, at a relatively low cost, Ms Clark said.

Supervision was critical, but the cost of a teacher aide, for an hour a day per school, was tiny compared to the potential savings in teeth and dollars.

No equipment was needed apart from brushes and toothpaste - the children in the Kaitaia study spat into paper towels, and rinsed their brushes at the water fountain.

The beauty of the study was that it removed the usual inequalities in oral health, caused by poverty, and the results had prompted interest from overseas, and from other DHB's around New Zealand, Ms Clark said.

She was now working on a detailed cost-benefit analysis, in the hope the government might consider rolling the programme out through Northland.

And though the study is over, Kaitaia Intermediate has kept up the toothbrushing - and continued to report good results, Ms Clark said.

And here's the Masters Thesis.

It's a shame that it seems needed, but here we are.

In related news, a friend emails me a public health anecdote from the mid-2000s. According to the anecdote, an academic did some joint research with MoH into rheumatic fever and found that shared toothbrushes were part of the problem, as were shared beds - the recommendation then was to hand toothbrushes out at GP offices to prevent that transmission vector. Toothbrushes are cheap.

According to the anecdote, MoH buried that part of the research in case it reflected badly on ethnic groups more likely to share toothbrushes. The collaborator never worked with MoH again due to frustration over the barring of the findings' being used.

If anyone knows more about this one, drop me a line.

What counts as 'Moderate' reliability for Cochrane?

Glenn Boyle prompted me to hit the Cochrane Review's findings around SSB price interventions a bit more closely.

If this counts as moderately reliable evidence, well, draw your own conclusions about the weight to put on the stuff they count as low or very low reliability.

Here are the three studies they evaluated.

1. Cornelsen 2017. They looked at a 10 pence price hike on SSBs across a chain of UK restaurants. 9% reduction in SSB items sold per customer. While there was a 22% increase in per-customer sales of fruit juice on the main menu, there was a 10% drop in fruit juice sales on the kids' menu, a 7% drop in sales of diet cola, and a 6% drop in sales of bottled water. They did not run it as a diff-in-diff, just looked at pre/post. Tap water isn't measured; could have been generalised shift towards tap water. And there's weird stuff - the change in consumption in levied SSBs is reported as significant with a p-value of 0.004, but the 95% CI runs from a -15.21 drop to a 3.15 increase. Typo? Who knows. It's public health. No discussion of whether there just might have been a coincidental generalised shift to tap-water given the drops in sales of diet colas that didn't get the price hike. Nothing on whether there was substitution into desserts. And it's all at Jaime Oliver restaurants; their shifting towards bankruptcy over time plus his generalised increasing awfulness may have affected customer cohort too. If his big menu reorganisation and self-imposed sugar tax was accompanied by a giant "I'm so great look what I did" publicity campaign, as it almost certainly was because it's Jamie Oliver we're talking about here, well, you might think that the clientele might have shifted away from the people who like soda to the kind of people who like folks that yell at people who like soda. No accounting for any of that. 
2. Blake 2018. A price intervention in a single convenience store reduced sales at that single convenience store. It was the convenience store in a hospital, so maybe it was a bit harder for folks to pick other stores. But come on. 
3. Breeze 2018. Leisure centres in Sheffield increased SSB prices by 20 pence and saw a 31% reduction in sales per customer, with some increase in sales of diet soda. No clue how many people brought in their own soda in their gym bags. Oh, but the intervention also included staff training and publicity and stuff that might have had additional effect on their own around salience of health and price.

Here's Beaglehole on reading this latest evidence:

But when sugary drinks are made more expensive, or sugar-free alternatives made cheaper, sales fall, the researchers found.

"The evidence is unequivocal... you put up the price, consumption goes down," NZ Dental Association spokesperson Rob Beaglehole told The AM Show on Thursday.

"You get rid of junk food from schools, consumption goes down. Better sugar labelling is again another way of reducing sugary drink consumption. There's lots of different ways that we can act."

I'll never disagree that demand curves slope down. But the elasticity matters. And this latest Cochrane Review ... well, if that's the basis for recommending generalised hikes in SSB prices via soda taxes...

Sweet restrictions

The Science Media Centre asked me for comment on the latest Cochrane Review on interventions around sugar.

Reading through the thing, I was struck by the weakness of evidence around a lot of the kinds of things folks here like to demand that the government do.

Cochrane rates the certainty of evidence on a scale that runs: very low, low, moderate, high.

The interventions with the strongest evidence base around environmental interventions aimed at reducing consumption of sugar-sweetened beverages were rated "moderate". Nothing rated high. Interventions rated as having "moderate" evidence included:

• Improved access to low-calorie beverages in the home environment
• studies in this group would provide free home delivery of bottled water or diet drinks to people often in places with unreliable access to clean drinking water, and found reductions in soda consumption as consequence. 
• Multi-component community campaigns focused on SSBs
• Results here drew from one study. 
• Government food benefit programs with incentives for buying fruit and vegetables and restrictions on the purchase of SSB
• Here, studies looked at interventions restrictions on purchasing SSBs using the equivalent of New Zealand's WINZ payment card. The studies found reduced sugar consumption. New Zealand already bans a lot of classes of purchase on the payment card, including alcohol and tobacco. It wouldn't be infeasible to do it here, but there would be a lot more SKUs that would have to be loaded up properly into the card - it could prove difficult in practice. Checkout clerks are already well trained around identifying alcohol and tobacco purchases; knowing which beverages would be banned and which would not would require the back-end systems being programmed correctly. I expect it wouldn't be a simple thing.
• In-store promotion of low-calorie beverages in supermarkets
• Evidence here all drew from Foster 2014. That was a randomised trial looking at in-store promotion of healthier items: lower-fat milk, ready-to-eat cereal, frozen meals, in-aisle beverages (Diet Pepsi and Aquafina water), and checkout cooler beverages (zero calorie beverages and water). Effects were often statistically significant, but I'm not sure that a store selling 24 more gallons of skim milk and 53 more gallons of 1% per week are really all that big a deal. 
• Price increases on SSB
• Three studies found that places chosen for soda price interventions, like a leisure centre or a particular corner store, saw reduced sales of those price-boosted items. But it seems kinda likely that folks would just be purchasing their soda at shops next door that weren't part of an experiment involving higher soda prices. You oughtn't generalise from it. No surprise that Beaglehole does generalise from it though. 
• Small prizes for the selection of healthier beverages in school cafeterias
• Evidence ranged in strength from moderate to low. In the Hendy 2011 study (rated moderate; the others were low), there was a three-meal-per-week reduction in the number of meals with unhealthy beverages selected in an intervention in primary schools where kids' meals were monitored and they got token rewards from parent volunteers chosen as monitors. If your school has that many available parent volunteers, I guess it's not that high cost to implement - though you might imagine other things parent volunteers in schools might more usefully help with. 
• Traffic light labelling
• Evidence here was rated moderate in reducing consumption of red-labelled beverages. 

Everything else had evidence rated as low or very low confidence. 

Here's what I told the Science Media Centre about it; Newshub picked up a bit of this commentary but didn't contrast the price bit I'd noted with how Beaglehole approached it.

The Cochrane Review provides an important synthesis of the evidence regarding non-tax interventions aimed at reducing consumption of sugar-sweetened beverages [SSBs].

The review found that many often-recommended measures have little evidentiary base, with certainty of evidence rated as very low. Interventions in this category included measures like healthier vending machines in workplaces and schools, restrictions on the number of stores selling SSBs, urban planning restrictions on new fast-food outlets, and menu-board calorie labelling. No studies were found that might provide basis for restrictions on advertising.

Some measures showed promise, with a moderate certainty of evidence established across numerous studies.

Improved access to low-calorie beverages in the home environment reduced SSB consumption, but many included studies focused on places without reliable access to clean drinking water. Regular home delivery of free non-SSB drinks across broad swathes of the population seems unlikely to pass any reasonable cost-benefit assessment, and especially in places where piped water is of reasonable quality.

Restrictions placed on purchases funded through food benefit programmes reduced SSB consumption, and could be implemented in New Zealand by adding SSBs to the list of prohibited purchases on Work and Income Payment Cards. But the administrative costs may not be trivial, and the imposition on low-income households who enjoy soda occasionally should not be ignored.

Small prizes for selecting healthier beverages in primary school cafeterias showed some promise.

While price increases in individual targeted stores showed reduced sales of SSBs in those particular venues, the surveyed studies in that area do not look at overall consumption; people could easily have shifted to purchasing from outlets where prices had not been hiked.

And while the review authors tentatively suggested a somewhat broader set of interventions may prove effective, they also warned that their confidence in the likely effects is low to moderate. Rather than providing evidence for policy change, we should view the report as suggesting measures potentially worth trialling within an appropriate experimental framework designed to improve the evidence base.

Where the evidence base presented for any substantial effect of interventions is moderate at best, even without being evaluated as part of a broader cost-benefit assessment that weighs implementation costs and costs to consumers, we should be highly sceptical of any calls for strong intervention based on this report. It should rather temper our enthusiasm for large-scale measures likely to impose substantial cost for rather less certain benefit. Pilot studies and trials of some of the more promising interventions may be warranted.

Herald on sugar

Kudos to Boyd Swinburn and the usual anti-sugar folks for getting this wonderful piece of advocacy published in the Herald as journalism rather than advertorial or op-ed. I'm cancelling my subscription to the Herald and asking for a refund of the balance of my annual subscription fee, but that's a bit beside the point. Swinburn et al have done a great job here with cheer-leading reporter Luke Kirkness.

Here we go.

"I've finished pulling teeth today, my right hand's actually sore I pulled out so many."

Those are the harrowing words of New Zealand dentist Dr Rob Beaglehole who is urging the Government to take action and tax sugary drinks.

The problem is so extreme more than $20 million is spent each year anaesthetising Kiwi children so they can undergo tooth removals as a consequence of consuming sugary drinks.

And today, a petition has been launched in an effort to convince the Government to introduce a tax on sugary drinks.

But the current Labour-led Government and Health Minister Dr David Clark have no plans for such a tax.

Excellent heroic-dentist versus uncaring-government framing.

"The Government needs to modify the environment that we're living in," Beaglehole, the New Zealand Dental Association (NZDA) spokesman, said.

"We've had enough of Coca-Cola, McDonald's and other junk food companies selling this sickness to our kids.

"They keep getting away with it ... we need to make the healthy choice the easy choice."

Beaglehole told the Herald last night the NZDA backed the petition but the Government should go further than just implementing a tax.

University of Auckland academic Dr Gerhard Sundborn, on behalf of The New Zealand Beverage Guidance Panel, is behind the latest petition.

Calls for a sugary drinks tax aren't new he said. One with 10,000 signatures was presented in August 2017 but largely ignored by politicians.

"It was extraordinary that this earlier call to tax sugary drinks ... was snubbed by the then Minister of Health, and by both major parties," he said.

Getting the journalist to fail to follow up with the Ministry, or to check in on whether the Ministry has done prior work on sugar taxes - again, excellent work. Those interested can read NZIER's comprehensive review of the prior five years' published literature on the topic - commissioned by the Ministry of Health. But the journalist isn't interested. At least Newshub's reporting covered that part. Like, you might think that a journalist would wonder why the Ministry has been sceptical.

"NZDA has estimated that we spend more than $20 million every year to anaesthetise children so they can undergo multiple tooth extractions as a consequence of consuming sugary drinks.

"We must find more ways to address these issues."

The Panel, made up of researchers from a range of fields including public health, medicine and marketing, suggests a targeted tax on sugar should be top-priority to tackle the country's interconnected issues with obesity, type 2 diabetes and rotten teeth.

Really? The dentists have been able to sort out what proportion of extractions are due to sugary drinks and what proportion comes down to other stuff and what comes down to a combination of factors including never brushing one's teeth? This is amazing. I'd love to see that research and see how they established it. The journalist wasn't interested, but I am.

I know I'm blockquoting the whole article here, but I don't feel too bad about it. Here's the press release from the New Zealand Beverage Guidance Panel, and much of the article is a paraphrase of it.

Who is the Guidance Council anyway? This Stuff article (no paywall, better journalism) from 2017 says it was set up by FIZZ - an anti-soda advocacy group. This isn't some neutral bunch of nutritionists - it is an anti-soda advocacy group. This brief says they were modelled on the US Beverage Guidance Panel, "The intention of the panel was to develop guidance to government and community groups to limit the intake of sugary drinks." So: Panel established to fight soda consumption argues for sugar tax.

Let's move on.

The Health Minister agrees but in a statement to the Herald he said the Government had no plans for a sugar tax, as he had "consistently said".

"We need to reduce sugar levels in our processed food and drink, and develop a better food labelling system," Clark said.

"I have met several times with the food industry and set out the clear expectation that business and the Government will work together on this issue."

In September, the Herald reported Prime Minister Jacinda Ardern was told a sugar tax would generate millions in revenue and save lives.

Ardern was briefed on a potential tax by the Ministry of Health's chief science adviser Dr John Potter at her request.

Potter said a tax of 20 per cent had been shown to work but should be based on volume or sugar content, not value of the product.

"Reduction of consumption via a tax will probably be greatest among the households with the lowest disposable income. In New Zealand, Māori and Pacific will benefit strongly," he said.

Potter did send that memo: 16 February 2018.

It was two-pages of unreferenced bullet points.

It made no mention of the comprehensive NZIER report on the effects of sugar taxes, which Potter had received on 15 August 2017 and which was publicly released, finally, after much prodding from me, on 31 January 2018: two weeks before Potter's memo.

The NZIER report was covered in the Herald on 2 February, by Newsroom on 7 February, and even in the Toronto Globe and Mail on 12 February. If Potter missed it in August, you would think that the Ministry of Health's Chief Science Advisor just might have noticed extensive media coverage of an important report in his brief during the fortnight before he provided his memo. It surely would also have come up in discussions within the Ministry between April and February.

Potter's failure to mention it, and providing advice concluding the opposite of the Ministry's comprehensive commissioned report, could reasonably be characterised as Potter, the Chief Science Advisor in Health, having misled the Prime Minister.

See, if you expect reporters to either know their beat or to ask people who do know the area, you'll be a bit disappointed in the Herald article by now. It would not have been hard to get NZIER's Peter Wilson on the phone.

And you'd be wondering just why you're paying $200/year as a subscription fee, and whether they'll refund the balance of the subscription like you've requested.

I'll stop there. The piece goes on, and does have a quote from the beverage industry saying that the beverage industry doesn't like sugar taxes. And it concludes with a link to Sundborn's petition - despite (I'd thought!) standard drill at Herald being that they don't outlink.

I'll reconsider the subscription cancellation if they fix this mess.

Previously:

• Not so sweet advice
• Extensive annotated archive of OIAed correspondence at MoH on sugar taxes
• The whole 'sugar' tag...

Red meat tax?

Boyd Swinburn's group wants rather a lot more controls on what we all get to eat. 

Radio NZ covers his report here; Chris Snowdon's summary of it is best.

The lead author of the report is Boyd Swinburn, a New Zealand doctor and food campaigner who declared last week on Twitter that the EAT-Lancet report shows where diets need to get to while his report shows how to get there. They are two sides of the same coin and whilst there is no shortage of policy suggestions in the EAT-Lancet document, including rationing and the outright prohibition of certain food products, the Lancet Commission takes it a stage further by calling for a global treaty.

Swinburn is obsessed with the web of corporate interests he sees all around him, thwarting his efforts to get the public to eat their greens. In 2017, New Zealand’s Ministry of Health commissioned the New Zealand Institute of Economic Research to look at the pros and cons of taxing sugary drinks. When the economists concluded, accurately, that ‘the evidence that sugar taxes improve health is weak’, Swinburn wrote a furious article denouncing ‘economists steeped in last century’s economic theories’, ‘merchants of doubt’ and the ‘vested interests of the food industry’. It is a theme he returns to with tedious regularity in the Lancet report.

...

Swinburn et al. seem to believe that the only barrier to governments leaping headlong into an extensive systems of taxes, warnings, bans and restrictions is ‘Big Food’. Whilst it would be naive to think that the various food lobbies have no influence on government policy, the authors never consider the possibility that this is because the industry’s arguments about trade, jobs, choice and prices appeal to politicians and, ultimately, to the public. ‘Big Food’ may not want tobacco-style regulation, but it is a logical fallacy to infer from this that politicians who reject such an approach have only done so because of ‘powerful lobbying’.

Whether or not the authors actually believe this narrative, it serves two useful purposes. Firstly, it allows wealthy activist-academics in the multi-billion dollar ‘public health’ industry to view themselves as plucky underdogs fighting Goliath. Secondly, it absolves them from answering difficult questions about whether their demands are reasonable, fair, or even realistic

Do read Snowdon's whole piece. Stuff has some of the government's response:

Associate Minister of Health Julie Anne Genter​ said the Government did not plan to tax red meat "at this stage", but an increase in awareness about climate change was affecting people's behaviour.

"Obesity and climate change are often framed as problems for individuals to change. This report shows it has been a failure of public policy and we need government action to protect our health and our climate."

The commission called for a global treaty, like those established for climate change and tobacco, to help governments restrict the influence of the food industry on policy and the establishment of a global philanthropic fund of US$1 billion (NZ$1.46b) "to support social movements demanding policy action".

The Lancet editor-in-chief Dr Richard Horton said the business model of large international food and beverage companies led to over-consumption of junk food in both high-income countries and, increasingly, low and middle-income countries.

Genter said she was "interested to learn more about how a global treaty would work, as politicians need to play their part too".

Swinburn said the food industry should be excluded from the "policy-making table" as the profit motive would always win out over improving health and reducing climate change.

There's a very good case for agricultural emissions globally coming under emission trading schemes or carbon taxes. In the absence of international coordination, the case gets tougher because you have to worry about whether production gets displaced to places where meat production is more carbon-intensive. Animal product prices would go up after agricultural emissions were included in the ETS, or in carbon taxes, but it would be a mistake to call that a red meat tax. It's more like, if you had a GST that excluded food products, getting rid of the exemption isn't a "food tax".

Going beyond that though, to tax and regulate and nudge and force everyone into eating and drinking only Boyd-Approved products - no thanks.

Previously:

• Sweet release
• The voice of presumption
• Winning hearts and minds

Ration books

The IEA's Chris Snowdon tries to live by the ration book that The Lancet's public health people would impose on the UK.

First up, the recommended diet, from page five of their report.

I like that they have a 31 gram ration of sweets.* 

Anyway, Chris does his best. But it doesn't look all that appealing. 

Here's breakfast:

[WATCH] The IEA's very own health warrior @CJSnowdon decided to try the @TheLancet's delicious nutrition guidelines for breakfast this morning! 🥓🍳 pic.twitter.com/0zJhqQTs6T

— IEA (@iealondon) January 17, 2019

And lunch

[WATCH] Part 2 of the IEA's @CJSnowdon following @TheLancet's nutrition guidelines. Doesn't that beef sandwich look like the stuff that dreams are made of? 🥪https://t.co/h9cdxIgoUx pic.twitter.com/ncsEuMAAgp

— IEA (@iealondon) January 17, 2019

And, finally, dinner for a hungry Chris.

[WATCH] Part 3 of @cjsnowdon following @TheLancet diet. 🍗

Not a fan of the diet yourself? "You don’t need to worry about choice or personal responsibility. They’re gonna use a system of taxes and bans... to make sure you don't really have much choice!"https://t.co/h9cdxIgoUx pic.twitter.com/Sscnswc5aQ

— IEA (@iealondon) January 17, 2019

As Chris points out, it's nice that this crowd has outlined an end-goal for once rather than the series of nibbles that always otherwise come with denials that there's a next step just around the corner. The report recommends measures like zoning bans on unhealthy food outlets, taxes and subsidies, reduced choice, reduced portions - and some non-daft things like finally getting water and effluent pricing right. But they have the whole thing back-to-front. 

Food choices shouldn't be targets. They should be the outcomes that emerge when distortionary subsidies are removed and when environmental effects are properly worked into prices. I'd be surprised if models that appropriately incorporated full environmental costs didn't result in changes in those choices. But you don't force it by nudges and shoves to get particular menus; you just make sure that prices incorporate costs properly and let people make whatever choices they want within that. 

* We can thank them for increasing the chocolate ration from 20 grammes to 30. 

Back to the sweet sweet bog

For the past several years, the public health crowd has brushed off John Gibson's work on sugar taxes by saying that they don't worry about things that aren't in refereed journals.

It takes a lot longer to get things published in economics journals than in public health. Inaccuracies in public health work can then go around the world's newspapers several times before economics starts testing the more robust work in series of departmental seminars before sending the revised and improved draft off to a journal.

Gibson's paper with Bonggeun Kim is now up in the Journal of Development Economics and is ungated for the next month via this link. 

Here's the abstract, which won't be unfamiliar to those who've here been following the debate.

Estimating potential effects of price reforms is a key issue for many developing countries. Demand studies increasingly use household survey data on budget shares, which vary with quantity, price, and quality. If quality response to price is ignored, estimated price elasticities of quantity demand conflate responses on quantity and quality margins. Our review finds over 80% of published studies using budget shares from household survey data have this error. We use survey data from Vietnam, with prices and qualities observed over space, to directly estimate the price elasticity of quality. This is much larger than what is derived from the income elasticity of quality, based on the Deaton (1988) separability restrictions. Across the 45 items we study, the own-price elasticity of quantity demand is overstated by a factor of four, on average, if the response of quality to price is ignored.

The paper covers complicated technical issues in simple language. Economists are sometimes stuck with household expenditure data that only says how much a household spent in total on a product category over the past week, fortnight or month. If they want to know how demand responds to price changes, they have a problem because that data does not say how much was purchased or the price at which things were purchased. The data only says what total expenditure was. Total spending could change because quantities changed, or because

These issues were recognized, and potentially solved, thirty years ago in a set of papers by Angus Deaton (1987, 1988, 1990). Deaton derived the response of quality to price so as to isolate quantity demand elasticities, without needing price data. He assumed weakly separable preferences so that unobserved effects of price on quality could be derived from income elasticities of quality and quantity. Intuitively, by forcing the effect of price on quality to operate as an income effect, Deaton leveraged off what household surveys are good at – measuring incomes or expenditures – to get at what they are bad at or rarely do, which is measuring local prices.1 If one had a household survey with good measures of local prices, and with the usual data on food group expenditures and quantities, one could directly estimate the effect of price on quality by using unit values to indicate consumer quality choice (because the unit value is the product of price and quality). Indeed, Deaton (1990, p.302) concluded that it “would be extremely desirable to have direct measures of market prices against which this method could be tested.”

Gibson and Kim have data allowing this testing. And the testing shows us that weak separability fails, so back to the bog:

Our main title deliberately copies Deaton (1988) because in our view unidentified quality responses are still biasing price elasticities of quantity demand estimated from survey data. Our sub-title is from Gordon Tullock (1985, p.262) describing his role in an intellectual debate:

“… my role in this controversy is to watch people trying to get out of the swamp and then push them back in. Clearly, my role is not a constructive one, but nevertheless, I feel it necessary.”

Our contribution may be viewed similarly; before Deaton, economists used unit values as if they were prices when estimating elasticities of quantity demand. They were in a bog where quality and quantity effects intermixed. Deaton found a way out, pulling himself up just by the bootstraps of separability restrictions, with no firm ground (good price data) in sight.7Standing on firm ground now, with good data on local prices and on consumer's choice of quality, we are pushing people back into the bog by showing that these separability restrictions do not hold. More generally, any model that assumes that the price and income elasticity of quality are closely related is unlikely to hold. The necessary role we play, even if not a constructive one, is to show that we are still bogged down; many estimates of the effect of price on quantity are instead some murky mix of quality and quantity responses. Our defence for our role is that it is only by realizing that we are still bogged that the value of firm ground (good data on local prices and on quality) becomes clear. In our opinion, there will be little headway in using household survey data to accurately estimate quantity responses to spatial price variation until better data on local prices and qualities are collected, so that responses on both the quantity and quality margins can be directly estimated.

I love Tullock references - this one's to Tullock's pushing people back into the bog by showing that explanations around the 'why so little rent-seeking' problem were wanting. Gibson and Kim show that Deaton's path out of the problem doesn't work.

Public Health critiques around hierarchies of evidence and that this is just one paper compared to dozens of other papers so we should look to metastudies - they completely misunderstand the nature of Gibson's contribution here, whether through ignorance or stubbornness, I don't know. Gibson and Kim show that the dozens of other papers that use the Deaton method for estimating price elasticities out of household survey measures are systematically incorrect. Doing a metastudy of papers that have a systematic error in method will not get you a correct answer.

These large biases, from either ignoring quality response to price, or from restricting that response to be what weak separability allows, are in line with the few prior studies on the quality response issue. In the first of these, quantity demand elasticities were inflated to an average of 250% of their unrestricted value, if quality response is ignored (McKelvey, 2011). While that evidence was just for six broad food groups, our results are much the same if based on broad consumption groups or narrower price survey items, so this magnitude of bias may hold more widely. A similar level of bias is seen in studies of soft drinks demand using the unrestricted method and the standard price method. In Melanesia, where spatial price variation is high and product differentiation of soft drinks more limited, the quantity demand elasticities are overstated two-to three-fold if quality response to price is ignored (Gibson and Romeo, 2017). In Mexico, where there is less spatial price variation and more quality variation the bias is four-fold (Andalón and Gibson, 2017).

These quality responses may undermine price policies that aim to reduce consumption of unhealthy items. For example, quantity demand elasticities that ignore the quality response to price are used by Grogger (2017), to forecast that Mexico's peso per liter tax on soft drinks will reduce steady state body-mass index (BMI) of Mexicans by up to 1.8%, which is enough to provide some health benefit. However, if quality downgrading in response to tax-induced price rises is accounted for, the average BMI will fall by just 1/200th (Andalón and Gibson, 2017). This is salient to Vietnam, where a special consumption tax of 10% on soft drinks, instant tea and flavored milk has been proposed by the finance ministry as a way to reduce the health burden of high sugar intakes. However, if adjustment to higher prices is on the quality margin and quantity consumed falls only a little, as in Mexico, this proposed tax will be largely ineffective in achieving health objectives.

The implications are rather broader than sugar tax.

Extrapolating from income effects to price effects may be unwise, as seen with failure of the weak separability assumptions, but a prior debate in development economics about effects of income on nutrition is germane to this discussion. Early studies derived indirect estimates of the income elasticity of calories from food expenditure data, assuming that higher spending on a food group meant proportionately more nutrients. This ignored within-group quality substitution, and later studies showed that extra spending on food as incomes rose went on attributes other than food quantity. Writing about poor people with rising income, Behrman et al. (1988, p.308) noted that:

“… at the margin they concentrate on food attributes other than nutrients – taste, appearance, odor, degree of processing, variety, status – that are not necessarily highly positively correlated with nutritive value.”

In perhaps the same way that policy makers learnt that effects of income changes on nutrients are mediated by within-group quality substitution, so too may they need to learn that effects of price changes on quantities can likewise be mediated by responses on the quality margin.

While Gibson and Kim don't cover it here, because it is obvious, the analysis applies whether a soda tax or sugar tax is ad valorem or a per-unit excise. Whatever you thought the demand response to your price increase was going to be, it'll be smaller to the extent that your elasticity estimates conflate quantity and quality adjustments.

The only case where this won't be true is for people who are already only consuming product that is at the lowest quality point - and you'd probably then want to have an elasticity estimate for that specific cohort anyway rather than assuming that the estimates that apply elsewhere also apply to that cohort. 

Sugar tax advice

Ministry of Health Chief Science Advisor John Potter's advice to the Prime Minister about sugar taxes, a two-page set of unreferenced bullet points, ignored the comprehensive review commissioned by the Ministry and released only a few days before Potter's advice. NZIER's report was released 31 January 2018; Potter's memo was dated 16 February.

I was curious whether Prof Potter had seen the NZIER work prior to writing his bullet points. So I asked the Ministry.

Potter was provided a copy of the report on 15 August, 2017, in an email from the Ministry's Chief Economist.

The Ministry holds no records showing feedback from Potter, so he might have missed it. But the report did draw a fair bit of media attention - and not just from me here on the blog.

The Herald covered it on 2 February.

Newsroom had it on 7 February.

It even made the Toronto Globe & Mail on 12 February. 

And it surely would have come up in discussions within the Ministry between August and February.

What's particularly interesting in Croxson's email is the suggestion that it be put on the Ministry website after getting it to the Minister and presenting it to ELT. The email is dated 15 August. It did not make it onto any Ministry website. Instead, it showed up on NZIER's website, rather a while after I made OIA request that it be released, and more than five months after the Ministry received it.